Investing in Minority-owned Businesses

A stumbling block for growth for many Black- and Hispanic-owned businesses is access to capital and leadership. Earlier this year, three Charlotte business titans – Malcomb Coley, managing partner with EY; former Bank of America CEO Hugh McColl; and Duke Energy Executive Lloyd Yates – announced the creation of Bright Hope Capital, a unique investment firm to support and elevate minority-owned businesses in the Charlotte region. 

Since January, Bright Hope has acquired two such companies to their portfolio. The firm hopes to give a leg-up to Black and Hispanic-owned businesses in the region. To discuss are: Lorie Spratley, the newly named Chief Operating Officer for Bright Hope Capital; and James Mitchell Jr., retired Charlotte City Council member and the new president of RJ Leeper Construction, which was recently acquired by Bright Hope. 

Transcript

Jeff 0:00
I’m Jeffrey Jones, Director of Executive Education and Professional Development at UNC Charlotte, and this is Charlotte Business Buzz. Connecting the Queen City’s business community … From UNC Charlotte’s Belk College of Business.... This is Charlotte Business Buzz. Earlier this year, three Charlotte business leaders announced the creation of a unique investment firm - one to support and elevate minority-owned businesses in the region. With backing from three Charlotte business titans: Ernst & Young managing partner Malcomb Coley, former Bank of America CEO Hugh McColl, and Duke Energy Executive Lloyd Yates, they’ve acquired two such companies to their portfolio. Empowering these with financial and social capital, the firm hopes to give a leg-up to Black and Hispanic-owned businesses in the region. Joining us to discuss is Lorie Spratley and James Mitchell Jr. Mrs. Spratley is the newly named Chief Operating Officer for Bright Hope Capital. She has more than 25 years experience as a corporate executive, most recently as executive director at JP Morgan Chase. Mr. Mitchell is the new President of RJ Leeper Construction, which was recently acquired by Bright Hope. He was Charlotte’s longest serving City Council member, retiring in January after 20 years of service to the city. James and Lorie, welcome to the program. 

James 01:11
Thank you Jeff. 

Lorie 01:12
Thanks for having us Jeff.

Jeff 01:14
Well I'm glad you're here. Let's start with you, James. As one of Charlotte's biggest supporters over the years, what makes Charlotte great for business? 

James 01:22
Jeff, thank you for the opportunity and for that question. So, I do think it's like three categories - I think the first category is our entire business climate. We work very well with our general assembly and our governor and Raleigh and so a lot of time we pursue corporations, we have the state support. I think secondly when you look at where everybody's relocating from - from New York, Chicago, California - our tax structure is very favorable for business relocating and third is the talent. When you think about all the universities and community colleges we have in the state of North Carolina, people come here because they see the talent that's here. Let me give you this interesting statistic - prior to COVID, we had 110, 110 people relocating to Charlotte per day. It's just amazing and so now we're the 14th largest city - its estimation that by 2024 we will be over 1 million people in the Charlotte city limits and then 1.4 county-wise. 

Jeff 02:19
That's amazing growth. 

James 02:21 
It really is I mean - and you think about the weather on the personal side and the professional sports, there are amenities that we - as I remember being on city council how we kind of underestimated - one was professional sports, being close to two hours for the beach and two hours to the mountains, everyone kind of really liked Charlotte, and and so for us it was like how do we sell the total package and make sure people continue to move here. We’re the third fastest city for millennials and so not only do we have the senior citizens who stayed here and made a career, now we're seeing an influx of those under 30 to say - you know what? Charlotte has a special buzz and we want to relocate to Charlotte. And then fintech - you look at the announcement we had the other day, a lot of fintech jobs are relocating to Charlotte was bringing that younger talent to our city. 

Jeff 03:11 
How would you describe this business climate for minorities in Charlotte? 

James 03:15
Now that's a different story. I would say this probably -  you think of businesses, African-American business and brown businesses - there's still a desire for access to capital, there's a desire for access to opportunities and there's tremendous desires that the public sector has to play a bigger role - here's a prime example Jeff. Healthcare-wise, Atrium has said they want 40 percent minority participation all their projects. That's the type of initiative we need to have from the private sector. I think on the public sector - the county and the city - they do a good job for inclusiveness to have minority and hispanic owned business participate in city and county projects. But it's on the private side that we need our corporations to be more committed to inclusion and so we still have a long way to go. You know, I champion hard for my 20 years on city council about minority participation. Wow do we create the businesses, but at the same time how do we make sure they have access to the opportunities and so I still think - when you look at all great cities that have embraced minority participation - the DCs, the Atlanta, the Chicago it's a different narrative because I think everyone has bought into the clear vision that if a city was gonna grow minority participation has to grow as well. 

Jeff 04:28
From your perspective, what are the most significant business challenges that black and hispanic-owned companies face?

James 04:35
Access to capital’s number one. They really like the ability to get from bonding to funding, to grow their company, to hire more talent and all that has to do with funding and access to capital. Secondly I would say their back end office support. A lot of the small minority businesses work in their business and so a lot of the accounts receivable and accounts payable go kind of lacking. I would tell you Jeff, if you did a survey most of the black and brown companies cannot afford any accounts receivables over 45 days and we have in the climate right now they don't get paid to 90-120 - that really messes up the cash flow and put them in a tough position. I cannot pursue another job because I don't have the funds to do a RFQ, RFP. I could not pursue another job because I don't have the funds to go out and bring that talent and I do know black and brown will hire more who look like them which definitely helps as Charlotte still has a big challenge at 50 for 50. If you were born in poverty, you would stay in poverty. I see the minority businesses addressing that type of issue.

Jeff 05:45
So I guess this might be where Bight Hope Capital steps in. 

James 05:49
Ah, my heroes! 

Jeff 05:52
Lorie, can you tell us a little bit about Bright Hope Capital?

Lorie 05:55
Yes, Jeff. First, I would like to say thank you for having both James and I here today. When we think about Bright Hope Capital - Bright Hope Capital was founded by three prominent leaders here in the Charlotte community. Mr. Hugh McColl, Malcomb Coley and Lloyd Yates. The prominent men determined that we needed to create an investment fund to go out and to assist African-Americans, blacks and latinos, browns within the overall Charlotte market from a financial standpoint. 

Jeff 06:24
So when you think of the challenges that James alluded to earlier, how do you think Bright Hope is going to be able to help and support with capital and other support that might be available through the organization?

Lorie 06:36
Just to piggyback on what James had kind of mentioned when he indicated from a receivable standpoint. We have minority owners where they're receiving receivables a net 45 or net 60. One of the things that we're looking at from a Bright Hope Capital standpoint - not only providing financial capital but also social capital. When we talk about the social capitals - that's meanings that the owner’s picking up the phone and calling some of your top private companies and saying this is a smaller minority owned company. From a cash flow standpoint they should be looking at more of a net 30, or maybe even a net 15 from a receivable. So we're working alongside with those minority-owned businesses as well as those customers to determine - in this particular case this particular customer needs more of a net 15 net 30. So we're helping them from a receivable standpoint. In addition we're providing education for them. Oftentimes we know, we look at stats that minority companies fail within their first three years and that failure is often due to not having a fully understanding of when it comes to running an overall business. One of the key things is running a business - understanding your profit and losses - your P and L. So from that we're educating them how to actually create their financial statements, their balance sheets, their P and L. In addition, how do they compile that financial information when they're going to their bankers looking to obtain lines of credit. Also we think about how do we continue to bridge the gap from a minority company within the Charlotte community from a social capital. So for example they're working on company X and we know they have that certain expertise where company B is looking for that expertise too. So how do we connect the minority contractors with that particular customer that they can provide that service. So it's not only - it's financial capital that we're providing - we're also providing that overall social capital. 

Jeff 08:29
Are there other criteria and how you've chosen businesses for acquisition or investment? 

Lorie 08:35
So we're looking at the business, we're looking at them more so from stability - how have they been stable. And then we go in and go do overall due diligence to determine whether or not if we can come in and scale those particular companies up so going back to your previous questions - are we looking at a particular industry? No, we're looking at all industries. We're looking at where we can come in and scale that company up from where they've been. In the past maybe they've had cash flows, they haven't had the cash flows in order to purchase more products or to go out and do work on larger - well in this case we own a construction company - from a construction standpoint and a hauling. So we're looking at those particular entities and say how can we come in and scale those entities up. 

Jeff 09:17
James, your new role with RJ Leeper. I'm curious to learn a little bit more about the company. You're the first acquisition of Bright Hope and I'm also curious about RJ as a mentor. 

James 09:30
Alright Jeff, I'm gonna try not to get motion on the second one okay - on the first one I’ll be able to. So RJ Leeper has been around for 28 years in the City of Charlotte, founded by Ron Leeper who served on city council from 1980 to 1988. And the story goes, as Mr. Leeper was stepping down he got a phone call from Hugh McColl and Hugh McColl says Ron, come up to my office. He said you've been good for this community - the City of Charlotte - what would you like to do next. And Ron at that particular time told Hugh, said there's not a minority-owned company that's a general contractor in the City of Charlotte. And Hugh said well we can change that and Ron said we should. So three weeks went by and Mr. McColl called Ron again and said Ron - you know that issue we had earlier - talked about no minority contractor -  I got an idea. And Mr. Leeper said I'm all ears - he said I just called FN Thompson and FN Thompson is going to hire you and teach you how to have the first minority owned general contractor in the City of Charlotte. Mr. Leeper said you know Hugh I was addressing the problem it didn't have to be me, and Hugh say I have no one better who's committed to minority contractors and and making a difference this community than you. And so it formed in 1993, Mr. Leeper worked at FN Thompson about four years. An so during that time, Hugh McColl was so committed, he paid half of the salary. FN Thompson paid half and Hugh McColl paid the other half. So after four years, Mr. Leeper said time for me to go out on my own and that's when RJ Leeper was founded and guess who gave Ron his first project? Mr. McColl  - he gave the transportation center. So the transportation center  right there in front of the Spectrum was the first contract that Mr. McColl and RJ Leeper did together. On the personal side, this is kind of a little emotional for me - Mr. Leeper has been a mentor for me for a long period of time, Jeff. I met him back in 1985, I just moved - no 1989 - I just moved back from Ohio and I turned on the TV and here was this African-American with a big afro at a press conference talking about starting an organization called Save the Seeds. It was African-American men - spiritual men - who he wanted to mentor young men who the Charlotte Mecklenburg school system had said were high risk and was about to drop out. Mr. Leeper believed at the time that if we can save our kids, we would save our future and so I joined Save the Seeds back in 1989 - about 1995, Mr. Leeper talked to me about running for public office and I told him I didn't want to be a crook - I thought our elected officials were crooks at the time. So I said Mr. Leeper that's not me. I said I'm offended you asked me about being an elected official and you know he kind of nicely said, James if we don't have good people like you who serve this community with a heart we're going to continue to have those crooks serving our community and so it was very humbling and I went away and I thought about it but how do you say no to a man who served this community for eight years, who's pulled his soul into making Charlotte a better community and so I said yes, and Jeff for the next two years we met once a month about integrity, about ethics, about - you know  - don't spread yourself too thin, just about different topics to prepare me to serve this public. In 1999 I was fortunate - of course he headed up my fundraiser - and I would be elected to the city council. Fast forward, in 2013, Mr. Leeper and I had a conversation about - you need to get in construction. At the time I was doing solar panels and so 2013 I got hired by Barton Malow to be business development. Stayed at four years and went to JE Dunn and then about four years ago, Mr. Leeper calls me about one day working for RJ Leeper and I said wow. You know, mentor that would be great to continue your legacy that you had started, and so January 4th with the help of Bright Hope Capital - it was one of the proudest moments in my life to take on a legacy from a man who pours so much into me. 

Jeff 13:37
So Lorie and James, how do you expect that the two of you will work together as you sort of move forward in this new venture? 

James 13:44
Well I think the biggest advantage for Bright Hope Capital for me was the access to capital. I mean Lorie touched on it, Jeff - a lot of African-American businesses just not fortunate and so I’m blessed and honored that I have a group like Bright Hope Capital to say - we're going to invest in you, we're going to allow you to bring in the top talent, and a lot of a lot of times we don't have the flexibility to go get the talent and wait for the projects to come. You get the projects first, and then you scramble trying to find the talent. I think secondly, it has helped me raise the branding of RJ Leeper. I tell my HR director you know we got a lot of swag now - so we got the face mask, we got socks, we got ribbon, and a lot of that, Jeff, is about branding - how can we raise our branding to another level. And thirdly, and Lorie touched on it - social capital. It's good to have people who can pick up the phone and when you have an issue, they can make a phone call and it kind of helps you. So there's a lot of pressure on delivering - both from my mentor, Ron Leeper, and from Bright Hope Capital, but every day I come into the office - I'm excited because you know this is something I've been waiting to do for about four years now is here. Every day is a good day for me. 

Lorie 14:56
I'll piggyback on a lot of those that James has said. The biggest thing for me - I've spent 25 years in the financial service industry - and so when I can sit down with individual minority-owned companies and just kind of walk them through their financial statements - for them to understand from a cost accounting standpoint the biggest thing is - are you really making revenues, how do you know you make revenues, and so for me to be able to bring in that expertise from what I've been doing for the last 25 years and to assist them to have a fully understanding of their overall P and L, and taking a step back and saying - where are some changes do we need to make, and what are some of the questions that we should be asking, how do we go through negotiating from whether or not it's supplies that we're getting, and so from that standpoint it's afforded me an opportunity to look back over my 25 years within the financial service experience and say - tell my parents I put that degree to work, from that accounting degree, and so just being able to work alongside with the three prominent owners of Bright Hope Capital as well as with James and just to be able to get back in the overall Charlotte community.

James 16:03
Hey Jeff, I will add one follow-up - now everyone has not embraced us. Usually minority participation is just to check a box, and so with Bright Hope Capital’s assistance, we've been able to bring bonding to a lot of the projects. And so when you're bonding, not only are you putting skin in the game but that allows you to bring resources to the table, and just as much - it's important me to develop my staff and I can only develop my staff if they're given an opportunity to work on projects. And so initially in December when we started talking about we're going to bond at a minimum 30 percent - you had some people in construction industry it was like - whoa, that's too much, we're used to giving you ten percent. And so having that social capital though helped me out tremendously when I had my board members then, we'll make calls and talk about this is the new RJ Leeper company, we were embraced more. So I do think where we are now hope will set the model for other minority companies to really be at the table, be at the table about your staff and employees and growing your business, not just doing a project - build relationships.

Lorie 17:16
And the last thing I'll add there Jeff is when James talks about the social capital, when you're looking at the three prominent owners here of the fund - they can pick up the phone and call any CEO in the world. And so when you think about from a social capital standpoint, that brings an added advantage to Bright Hope Capital. 

Jeff 17:33
We’ll be right back with James Lorie Spratley in just a moment on Charlotte Business Buzz. Fifty years ago, UNC Charlotte launched the first graduate program in the region for working business professionals. Today, this nationally ranked part-time MBA continues to drive business in Charlotte and beyond. Whether you’re just starting out in the business world or contemplating your next step in an established career, the UNC Charlotte MBA is designed to meet your individual needs and goals. Learn more at mba.uncc.edu. 

Jeff 18:08
Welcome back. We’re continuing our conversation with RJ Leeper CEO James Mitchell Jr. and COO of Bright Hope Capital Lorie Spratley. All right, James, you recently ended a 20-year career on the Charlotte city council .As a city council member, you were known for advocating for economic development and for your support of minority-owned businesses. How do you see yourself continuing this in the private sector?

James 18:31
First of all, Jeff if I may, let me thank your listeners who have allowed me to serve this city for 20 years - it was a great honor - never did I think I was going to be a public servant. I started off as a skinny basketball player in west Charlotte and and never thought anything about serving our community, so thank you to your citizens who allow me to serve. So I think there's three areas I want to continue just my passion. I think number one is make sure I hire African-Americans to be a part of RJ Leeper and that's even starting off and being committed at the college level. We have probably two of the best engineering programs in North Carolina. And North Carolina A&T - they develop and graduate more African American project engineers, and secondly - a lot of people don't realize - is UNC Charlotte. UNC Charlotte has a great college of engineering program - they rank one and two when it comes to African Americans. So first of all it's hiring more African-Americans. Then secondly, I'm proud to say Jeff, RJ Leeper has a highly respected workforce development initiative and so we're going to take the challenge of the 50-50 - the study that came out and you look at those numbers statistically, they do look like they are African-Americans who don't have the opportunity to move out of poverty. So what RJ Leeper does on our project, Jeff, particularly the convention center and the airport we hire those who are unemployed and who are underemployed - there is a difference. And so we're starting them off put them through training and Jeff I can tell you on the convention center - our goal was 21, we have hired 37, on the airport our goal was 40, and we've hired 57. So if you stop for a minute and realize how we impact a total of maybe 84 people who were not working - didn't have a skill set - and now they make an average of $17.10. I mean that is my way of saying I gotta continue to help people and myself and then thirdly, Jeff I gotta make sure I'm part of organizations and so we joined the Metrolina Minority Contractors Association, we joined United Contractors of NC and so I want to continue to be that voice to push to say - if you have opportunity, let's hire talented African Americans. If you have opportunity, let's put them to work. If you have opportunity - is what I share with my wife - if they can see you, they can be you and so I'm trying to make sure I raise a profile by being very involved in African-American professional organizations so they can see me and one day say - I want to be a president of minority-owned company.

Jeff 21:00
The COVID-19 pandemic continues to have a  significant impact on all businesses in the region. How do you see these kinds of investments helping black and brown businesses survive and thrive going forward? 

James 21:15
I do think the PPP has been very helpful to black and brown businesses to keep their doors open and there will be another wave of federal dollars funding that will be coming. But Jeff, here's what the big disconnect is - we have to market a program and so black and brown businesses are aware of it. So many times our companies and organizations not aware of funding, not aware of the criteria, and one thing we did differently with the Foundation of the Carolinas, we put it in Spanish, we use the local YMCA. So we went to the people to help them instead of having the people come to us. 

Lorie 21:48
And I’ll just add there Jeff when we think about the fund, one of the things that we've done is, when we look at our minority business owners within the community, one of the things oftentimes when they have borrowing capacities. Their borrowing capacity is at a higher interest rate. So one of the things we've done we've taken a step back and say let us look at your overall debt and what is that overall interest rate that you're paying. Through our social capital has afforded those business owners to actually be able to renegotiate and for us to go back and redefine what those applicable interest rates are - so for example you may run in cases where someone's paying 25 percent on a loan that they may have fifty thousand dollars and when you start thinking about all that interest that they are paying on before they even touch the principal, so we've been afforded now through our social capital just to sat down with those individuals and help them go and talk to the bankers and say hey they've been paying - they haven't missed any payments, they're showing a proven track history here with their payment. So let us just take a step back and say from a social capital standpoint, how can we assist those individuals when it comes to overall debt? 

Jeff 22:56
So let's shift to the future of Charlotte for a sec and when we think about Charlotte heading into the next couple of decades, how do you see Bright Hope Capital, RJ Leeper, other efforts that you're involved in shaping the region as we head into - towards 2040? 

James 23:15
So let me give you from the RJ Leeper perspective, so this is 2021 we’re talking 2040. All right, RJ Leeper will be in a new headquarters - a new corporate headquarters. RJ Leeper would have probably by then 150 employees. We would be probably around a 200 million dollar construction company, our workforce development program would be well known and by then we will have been hired probably about 2,000 people and put them to work and give them the self-esteem back - they scaled back and really addressed that 50 out of 50. We have a mentee protege program - we currently now we have seven people involved Jeff - we're trying to groom them and develop them. By 2040, we probably would have a hundred companies we would have had developed. I mean I think our mission is very clear, Jeff, what we want to do but it's not about us alone. It's about reaching back and bringing others along with us and so - I remember my my first board meeting - I had the board back in January I said, when we become a billionaire I want to create millionaires. And so we want to make sure that the community sees us it's that ray of hope, it's that model of success,  is that company that gives back - just don't take profit but investing in people. And so I think 2040 - when you and I and Lorie are in our rocking chairs enjoying life we're going to say man, we predicted this - that this was going to happen. I think Charlotte's going to be a different city. I think you talking about 2040, we're getting browner by the day  - that's why MLS soccer was a great fit for us. We're still going to have more international companies relocating to Charlotte and so I just think from RJ Leeper's perspective we're going to continue to grow, hire talent, develop talent, develop people. You know if you measure yourself Jeff, if I had to measure this we probably operating about a five now, at the end of the year we operating about probably the seven, but by 2040 though, I see Lorie and I on the front cover of Black Enterprise and they say - here's a success story, this is how you do it intentionally - not by accident, but you plan, you make the right changes, you pivot when you had to - but end of the day it's not it's really our faces on the front cover but it's really about our story that we hope will excite people. 

Lorie 25:34
And the thing I’ll just add there Jeff is - James alluded to we're looking to build our headquarters. One of the key things for us is that we're actually going into our own communities and looking at our headquarters versus being you know in the financial district in uptown Charlotte. Looking at where the black and brown communities are, because we're invested in those communities therefore we should call our home in one of those communities. 

Jeff 26:00
Well thank you both for your time today. It's been a pleasure.

James 26:03
No thank you, Jeff and especially UNC Charlotte. It's been a university has done a lot for this community and we appreciate you all allowing us to come on and talk about Bright Hope and RJ Leeper. 

Lorie 26:15
Thank you, Jeff. We would love to come out and spend some time with the students in the classroom once this pandemic is over. 

Jeff 26:21
For more on Bright Hope Capital, visit our website at belkcollege.uncc.edu/buzz B-U-Z-Z. While you’re there, check out previous episodes - our most recent one looks ahead to the post-pandemic retail landscape - and tell us how we’re doing by completing our survey.

This is Charlotte Business Buzz ... Connecting Charlotte business through one-on-one interviews with UNC Charlotte faculty, staff, alumni and industry partners… presented by the Belk College of Business and produced in association with University Communications.